J. Alexanders Corp. (JAX) Misses Q1 EPS by 3c on Revenues of $61.9M

J. Alexanders Corp. (NYSE: JAX) reported Q1 EPS of $0.11, $0.03 worse than the analyst estimate of $0.14. Revenue for the quarter came in at $61.9 million.

First Quarter 2018 Highlights Compared to the First Quarter Of 2017

• Net sales were $61,909,000, an improvement of 3.5% from $59,822,000 recorded in the first quarter of 2017.
• For the J. Alexander’s/Grill restaurants, average weekly same store sales per restaurant (1) were $120,100, a gain of 0.3% from $119,800 reported in the first quarter of 2017. For the Stoney River Steakhouse and Grill restaurants, average weekly same store sales reached $83,700, an increase of 6.2% from $78,800 reported in the corresponding quarter of 2017.
• Income from continuing operations before income taxes was $1,842,000 for the first quarter of 2018 compared to income from continuing operations before income taxes of $3,641,000 for the first quarter of 2017. Among the primary factors impacting income from continuing operations before income taxes for the most recent quarter was the quarterly valuation of the Black Knight Advisory Services, LLC (“Black Knight”) profits interest grant, which resulted in a profits interest expense of $1,907,000. This compared to income of $39,000 in the same quarter a year ago. The Black Knight profits interest grant was issued in October 2015 and requires a quarterly valuation. The non-cash expense (income) associated with this grant is being recognized over a three‐year vesting period which runs through October 6, 2018. It is calculated each quarter based upon the most recent valuation performed using the Black‐Scholes valuation model, with any cumulative change associated with the most recent valuation impacting the most recent quarter. Primarily due to the $11.45 per share closing price of the Company’s stock at the end of the most recent quarter, the grant’s valuation increased from $4,876,000 at December 31, 2017 to $6,684,000 at April 1, 2018. The Company also incurred consulting fees of $244,000 under its management agreement with Black Knight for the most recent quarter. This compares to consulting fees of $265,000 in the first quarter of 2017.
• During the first quarter of 2018, the Company’s income from continuing operations before income taxes was also impacted by transaction expenses of $926,000 related primarily to the proposed acquisition of the Ninety Nine Restaurant and Pub concept originally announced in August 2017. On February 1, 2018, the Company announced that it did not receive the required number of disinterested shareholder votes to approve the proposed acquisition, and the merger agreement was thereafter terminated. The transaction expenses were primarily related to professional fees for work performed during the first quarter of 2018.
• Net income for the first quarter of 2018 was $1,593,000, down from net income of $2,684,000 achieved in the comparable quarter of 2017. Results for the most recent quarter include an income tax provision of $138,000 compared to an income tax provision of $844,000 in the same quarter of 2017, with the decrease being primarily attributable to the impact of the decrease in the federal tax rate as a result of the passage of the Tax Cuts and Jobs Act of 2017.
• Basic and diluted earnings per share totaled $0.11 for the first quarter of 2018 compared to $0.18 recorded in the first quarter of 2017.
• Adjusted EBITDA(2) improved 7.2% from $7,601,000 in the first quarter of 2017 to $8,151,000 in the first quarter of 2018.
• Restaurant Operating Profit Margin (3) as a percent of net sales was 15.9% in both the first quarter of 2018 as well as the first quarter of 2017.
• Cost of sales as a percentage of net sales in the first quarter of 2018 was 31.1% compared to 30.8% in the corresponding quarter of 2017.

For earnings history and earnings-related data on J. Alexanders Corp. (JAX) click here.

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